Tax cut clears Statehouse

The proposal will be phased in over five years.
Mikala Compton / Graphic Designer

$620 million.

It’s a number that to Gov. Jay Nixon is cause for alarm and a veto, as it’s the eventual yearly cost of a proposed tax cut that cleared the General Assembly last week.

The proposal, SB 509, will now make its way to his office, where Nixon, a Democrat, is expected to shoot it down. The bill, sponsored by Sen. Will Kraus, R-Lee’s Summit, would lower state income tax by half a percent over the course of five years, so long as state revenue continues to grow.

The legislation so far has received unwavering support from Missouri’s Republican majority — the final House vote last week was 104 to 48 in favor of lowering Missouri’s tax levels. Rep. Jeff Roorda, D-Barnhart, was the only Democrat to vote in favor of Kraus’s tax cut.

Yet that may not be enough, said Rep. Chris Kelly, D-Columbia.

If Nixon vetoes the bill, it’s unlikely any Democrat would support an override, Kelly said. Factor in five Republican legislators who were absent during the vote and that’s the exact number the GOP needs: 109, the two-thirds majority necessary to override a governor’s veto.

House Bill 253, last year’s effort to cut taxes, would have slashed income tax to the same extent that Kraus’s bill intends to now. Yet when HB 253 fell to a veto, Republicans — who then held the same number of seats as they do now — were unable to come up with a two-thirds majority and failed to override Nixon.

To Kelly, the tax cut is an issue of education: Kraus’s proposal would cut $7 million from Boone County schools alone and unspecified millions from the University of Missouri System, which was the cause of Kelly’s opposition last year.

HB 253 was also riddled with errors, Kelly said, including a provision that would have removed tax-exempt status from items like college textbooks and prescription pills. And there’s still room in this year’s revamped legislation for error, he said.

“(And) in any case, even if I’m completely wrong about the error, the bill will result in a huge loss in revenue to the University of Missouri,” Kelly said.

At a news conference last week, Nixon agreed.

"On its face, this year's reckless fiscal experiment looks a lot like last year's,” he said following the vote.

Nixon claimed that Kraus’ bill was the product of discredited economic theories and cited the fact the Missouri is already the state with the sixth-lowest tax burden nationally.

He went on to criticize Republicans for what he called equally reckless legislation in voting to raise sales tax, borrow money for unnecessary building projects, expand tax credit programs and cut funding for state education.

“Taken together, these actions threaten to take what has been a AAA-rated state with a solid record of fiscal discipline and certainty and put it at risk,” Nixon said. “Those are not our values, and that’s not how we’ll move our state forward.”

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